3 Things to Consider Before Bidding on Your Next Project
Contractors receive the majority of their jobs by bidding on projects — the process of providing a prospective client or project owner with a proposal to build or manage the construction of a structure. During the bidding process, the owner sends out an invitation for bid (IFB) to a group of contractors establishing all of the project specifications, contract type, delivery method, and requests, the contractors submit their bid packages, the owner or issuing entity awards the bid based on a number of factors, and then the contract is negotiated and agreed upon in order for construction to begin. While that sounds easy enough, there are plenty of factors involved in bidding on potential construction projects, including where the project is located, the skill level necessary to complete the project, whether the project is worth the time and effort needed to invest, and more.
To help you accurately weigh the risks of future projects and increase your profits, we’ll go over three things to consider before bidding on your next project. For a legal advocate who can assist you in assessing your current obligations, bidding opportunities, and the scope of the project at hand, contact one of the Central FL contractor lawyers from Cotney Attorneys & Consultants.
One of the most important factors to take into consideration prior to bidding on your next project is the bidding situation. This is an umbrella term used to refer to the characteristics of the bidding process, such as the prequalification process, allotted time for submitting bids, bidding document price, qualification requirements, bidding methods, and more. The construction procurement process can be broken down into four categories: best value source method (BVS), negotiated tendering, low bid or lowest, and sole source or direct select.
Each of these methods awards contractors bids depending on different factors. For example, in negotiated tendering, you have a greater chance of having your bid selected because the selection process is typically based on a previous successful working relationship rather than simply having the lowest bid. In sole source procurement, a single contractor is selected to fulfill all the requirements of the project in a non-competitive procurement process. To have the best chance of securing your bid, you’ll want to select a procurement method that fits the needs of your business.
Next, you’ll want to consider the characteristics of the project itself. This involves much more than simply the location of the project, the type of labor required, and the stakeholders involved. Project characteristics also include the following factors:
- Type of project
- Type of equipment and materials required
- Site clearance
- Site accessibility
- Design team
- Safety hazards
- Expected date of commencement
Simply reading through the project specifications will help you better understand the scope of the job and determine whether or not this project is truly a good fit for your business. If the site is far away and your company is unable to place a new office near the jobsite, then it probably won’t be feasible to bid on the project. If the expected date of commencement is too far off, it may not be worth your time and effort to bid on a project so far in advance. The same goes for if you’re attempting to bid on a specialty project that would require extra time and money to train your employees in that specific field. For assistance evaluating the characteristics of your future projects, including project location, type of labor required, and site accessibility, contact a Central FL contractor attorney.
Last, but certainly not least, you’ll want to consider the financing of the project. This includes everything from the original price estimate and project cash flow to the anticipated value of liquidated damage and the possibility of delay or shortages on payments. If you waste time crafting proposals for projects that you don’t have the work capital necessary for or that will wind up with you becoming entangled in a payment dispute, you’ll suffer serious damages to your bottom line and reputation. It’s no use investing valuable time and resources in inappropriate projects that could be invested elsewhere. This is why it’s so important to conduct your own research and evaluation of the project prior to creating your next bid.
Break the cycle of bid failure by reviewing each of your bid packages carefully to ensure they are complete, realistic, and in line with the skillset and resources of your business. Only focus your efforts on bids that are high-quality, profitable, and, most importantly, manageable. For a legal advocate who can help you evaluate whether your next bid is realistic, financially secure, and worth your time and resources, consult one of our Central FL contractor attorneys.
If you would like to speak with a Central FL construction lawyer, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.